Air France Unions Prepare Frosty Welcome for CEO Pick Smith
(Bloomberg) -- Air France-KLM Group directors haven’t even voted on hiring Ben Smith as the company’s new chief and already its French unions are preparing a lively welcome for the Canadian executive.
Recruiting a foreign boss is “inconceivable,” nine unions said Thursday before a board meeting at which Smith probably will be chosen as chief executive officer. Labor groups will meet Aug. 27 to decide next steps in a long-running dispute over pay that’s led to 15 days of strikes and lost flights this year.
Smith, the No. 2 executive at Air Canada, will have to pursue cost cuts and operational improvements in a highly competitive industry while trying to rein in disgruntled unions, all with the French state looking over his shoulder. The poisonous atmosphere should come as no surprise: In 2015, Air France workers protesting job cuts stormed offices near Charles de Gaulle Airport, ripping the shirts off two managers as they jumped a fence to escape. Previous CEO Jean-Marc Janaillac staked his job on an a staff vote on his plans -- and lost.
“I’m sure he has an idea of the magnitude of the challenge,” said Chris Tarry, a U.K.-based aviation consultant. “Would I book a long-haul flight on Air France? It’s a question, because there’s a risk they’ll be on strike.”
Labor opposition won’t derail the hiring of Smith, whose 19 years in the airline industry give him the legitimacy to be Air France-KLM CEO, according to a senior French government official. It’s not up to unions to pick managers, said the official, who asked not to be named in line with government policy.
The French state is the carrier’s largest shareholder, with a 14 percent stake. An Air France spokesman declined to comment on the unions’ statement.
Smith has an “excellent profile” to run the company, and the state’s representative on the Air France board will vote to hire him, Finance Minister Bruno Le Maire said at a news conference in Ascain, on the Spanish border, according to Agence France-Presse.
The labor groups said they wanted “a responsible leader” steeped in the French model of workplace relations, as well as Air France-KLM’s position versus European competitors. They cited Donald Trump’s presidency in the U.S. as evidence of an “economic war” in which national interests are paramount.
“Other countries and governments show fierce protectionism when it comes to their airline,” they said. “How in this context, when we know the importance of the economic benefits of a carrier to the rest of society, can Air France be left in foreign hands?”
The unions also hit out at the role of Delta Air Lines Inc., saying that Smith’s candidacy was “being pushed by a competing company.” Atlanta-based Delta is an 8.8 percent shareholder in Air France-KLM and the two operate a revenue- and cost-sharing alliance on North Atlantic routes.
While the appointment of a foreign airline CEO might be controversial in a French context, it’s by no means unusual in the industry. IAG SA, owner of Air France-KLM’s arch rival British Airways, is run by Irishman Willie Walsh, while EasyJet Plc, which has grabbed market share on short-haul routes, recently hired Swede Johan Lundgren as chief.
One of Smith’s biggest assets from an Air France-KLM point of view is his experience and success in labor talks at Air Canada. He was chief negotiator in the most recent wrangle with pilots and cabin crew, securing unprecedented 10-year deals with both groups. Janaillac, and before him Alexandre De Juniac, resisted demands for higher pay at Air France, prioritizing investment in planes to compete with Persian Gulf carriers and low-cost specialists in Europe.
Also on the agenda, if Smith is hired, will be overseeing the possible sale of the French government’s stake and repairing relations with Dutch division KLM, which has never really come together with Air France to form a cohesive whole since a merger in 2004.
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